Using structural VARs, I find that external shocks are an important source of macroeconomic fluctuations in emerging markets. Furthermore, U.S. monetary policy shocks affect quickly and strongly interest rates and the exchange rate in a typical emerging market. The price level and real output in...

This paper explains a currency crisis as an outcome of a switch in how monetarypolicy and fiscal policy are coordinated. The paper develops a model of an open economy in which monetary policy starts active, fiscal policy starts passive and, in a particular state of nature, monetary policy...

We decompose by origin the sources of the variation in real aggregate output and aggregate price level in the Czech Republic, Hungary and Poland. We find that a sizable fraction of the variation is attributable to external shocks, especially so for aggregate price level. We show that euroarea...

In recent policy debates some have argued that expansionary monetarypolicy in Japan can increase real output in Japan and in Japans neighbors,while others have warned that it is a beggar-thy-neighbor policy. In this paper weestimate structural vector autoregressions to assess the effects of...

In the data, individual prices change frequently and by large amounts. In standardsticky price models, frequent and large price changes imply a fast response of the aggregate price level to nominal shocks. This paper presents a model in which price setting firms optimally decide what to observe,...